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TMI Blog2025 (1) TMI 1338X X X X Extracts X X X X X X X X Extracts X X X X ..... s purchases to the same rate of other genuine purchases.
In the instant case, the assessee has shown that the GP rate on sale of alleged bogus purchases is more than the GP rate of other purchases. Hence, no addition by way of disallowance of alleged bogus purchases is warranted in the facts of the present case. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... egister etc., to prove the purchases. The assessee also submitted that some of the purchases were also exported and accordingly furnished the details of export sales made after getting customs clearance. Accordingly, it was contended that the purchases were genuine and they should not be doubted with. The AO, however, did not accept the claim of the assessee. In AY.2011-12, the AO issued notices u/s. 133(6) of the Act to the suppliers. All the three suppliers responded to the notices and confirmed the transactions. However, the AO fully placed reliance on the report given by the Investigation Wing. He took the view that the documents may be fabricated and further the assessee might have sourced goods from some other party and obtained bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Accordingly, it was submitted that the above said decision is not applicable to the facts of the present case. The Ld.CIT(A), however, did not consider any of the above said contentions of the assessee. He also fully placed reliance on the report of the Investigation Wing. With regard to the confirmation given by the above said three parties, the Ld.CIT(A) has simply observed that the assessee has also not furnished the detailed computation in respect of how these transactions were accounted in his books of accounts. Accordingly, he confirmed the disallowance of purchases made by the AO in both the years under consideration and hence the assessee has filed these appeals. 5. We heard the parties and perused the record. We notice that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same. Assessee makes payments to various purchase parties by account payee cheques. Hence all transactions are carried out through proper banking channels. However the addition was made by the AO on the basis of assumption surmise and conjuncture and it is against the law of natural justice and hence the addition is required to be deleted." 6. We noticed that the Ld.CIT(A) has simply placed reliance on the report given by the Investigation Wing. While confirming the addition, the Ld.CIT(A) has observed that the assessee has also not furnished the detailed computation in respect of how these transactions were accounted in his books of accounts. We are unable to understand the same. Had the assessee not accounted for the purchases, the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also notice that the assessee also could match the purchases with sales. The Ld.AR submitted that the rate of gross profit earned on sale of the alleged bogus purchases in AYs.2011-12 and 2012-13 respectively was 9.06% and 8.40%, while the overall rate of gross profit declared by the assessee in those years was 6.71% and 6.68%, respectively. We notice that the Hon'ble Bombay High Court, in the case of The PCIT vs. M/s Mohammad Haji Adam & Co (Income tax Appeal No. 1004 of 2016 dated February 11, 2019), has upheld the decision of the Tribunal in restricting the addition limited to the extent of bringing the G.P rate on purchases at the same rate of other genuine purchases. 8. We notice that the Hon'ble Bombay High Court has observed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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